OCTOBER SURPRISE, Part 3

Clinton sought dirt on W's dad

A Special Investigative Report
from the Western Journalism Center
with the assistance of the Iran Brief

Editor’s note: The Clinton administration is hoping to conclude a
“package deal” with the government of Iran in time for the November
elections that would resolve 20 years of hostility between the United
States and Iran, lead to renewed diplomatic relations, and give
President Clinton a much-sought-after “legacy” in foreign affairs,
according to interviews with intermediaries directly involved in the
negotiations and former U.S. officials.

As WorldNetDaily reported Monday in
Part 1, the deal, if successful, would restore complete commercial ties between the two countries, allowing U.S. oil companies to invest in Iran and to buy Iranian crude oil while allowing President Clinton and Vice President Gore to claim credit for “resolving” the current oil crisis, all in time for the elections.
Part 2, yesterday, detailed how a complex “spy swap” between Iran, Israel and the U.S., involving convicted spy Jonathan Pollard as well as 13 Jews arrested in Iran on dubious spying charges, unraveled at the last minute.

WASHINGTON — Negotiating with Iran’s mullahs is tricky business. But negotiating with Clinton may be trickier.

Conspiracy theorists have always had a field day with former President George Bush because of his brief stint as director of the Central Intelligence Agency in 1974-75.

In a 1991 book called “October Surprise,” former Carter administration official Gary Sick alleged that as a vice presidential candidate in 1980, Bush had initiated secret contacts with the Khomeini government aimed at delaying the release of U.S. hostages until after the 1980 elections. Sick’s allegations triggered a massive investigation by congressional Democrats in 1992 aimed at damaging Bush’s re-election chances.

The final report of the “Task Force to Investigate Certain Allegations Concerning the Holding of American Hostages by Iran in 1980,” released on Jan. 3, 1993, showed that “with few exceptions the Task Force located and interviewed nearly all the individuals around the world who claimed either to have participated in, or have knowledge of, the alleged events.”

Task Force lawyers “interviewed and/or deposed more than 230 people. Interviews were conducted across the United States, as well as in Algeria, Belgium, France, Germany, Italy, Portugal, South Africa, Spain, Switzerland, and the United Kingdom.” In addition, the Task Force examined “over 21,000 recorded conversations on 548 tapes” from one key witness, and pored through “thousands of raw, unredacted documents from the CIA, NSC, and the National Security Agency (NSA).”

In their quest for dirt on Bush, congressional Democrats left no stone unturned. Despite these exhaustive efforts, the Task Force concluded: “There is no credible evidence supporting any attempt or proposal to attempt, by the Reagan Presidential Campaign — or persons representing or associated with the campaign — to delay the release of the American hostages in Iran.”

But President Bush did conduct secret diplomacy with the government of Iran during his tenure in office. He alluded to back-channel efforts to release the U.S. hostages in Lebanon in his inauguration speech in January 1989, when he addressed Iran’s leaders and said pointedly: “Good will begets good will.”

By 1991, the secret talks with Iran, led in part by United Nations envoy Giodominico Pico, led to the release of the last U.S. hostages in Lebanon. In exchange for putting pressure on their Hezbollah proteges in Lebanon, the Iranian government of then-President Hashemi-Rafsanjani was expecting the United States to release all Iranian government assets still frozen in the United States, including some $2 billion worth of military spare parts that had been sitting in the Victory Van warehouse in Sterling, Va., since 1979. They also expected Bush to allow Iran to gain broader access to U.S. dual-use technology and advanced equipment for rebuilding Iran’s decrepit oil industry.

While the Bush administration did allow some loosening of export controls on sensitive technology, it carefully reviewed each sale on a case-by-case basis. Still, U.S. sales to Iran increased from $60 million in 1989 to $747.4 million in 1992, according to OECD trade statistics. But the much-awaited diplomatic opening never came.

In December 1992, Iran offered to purchase several billion dollars worth of Boeing civilian airliners to sweeten the pot. The Iranians also concluded a preliminary agreement with Chrysler to build an automotive assembly plant in Iran, according to export licensing records obtained from congressional sources and interviews with former Bush administration officials.

The Iranians were also seeking to buy short take-off-and-landing (STOL) aircraft, ostensibly to be used as crop-dusters. Pentagon experts claimed the planes, initially designed for military use, had been specially adapted to disperse freeze-dried biological warfare agents.

Although a resumption of diplomatic ties was not then in the offing, the commercial deals were intended to trigger the release of frozen Iranian assets in the United States, which Rafsanjani erroneously claimed amounted to more than $17 billion. Iran was offering to open the doors to U.S. businesses, including U.S. oil companies, traditionally Republican campaign contributors.

In the end, “we decided to leave those decisions to the next administration,” former National Security Adviser Gen. Brent Scowcroft told an oil conference in Dallas in May 1996, in response to a question from this reporter. “The Iranians came up to us with offers to talk, but when it came right down to it, they could never decide to go ahead,” he said.

First contactThe Clinton administration first sought contact with Tehran only weeks after taking office in January 1993. But administration operatives were not seeking to resolve the commercial or strategic issues then in dispute. Instead, they were fishing for political intelligence they could use against former President George Bush.

“During the first weeks of the Clinton administration, in early 1993, I was asked to obtain information from Tehran on the ‘October Surprise,'” said an intermediary who has carried proposals back and forth between officials in Washington and Tehran for several years.

“The White House wanted the information by March 1993,” the intermediary said. When then-President Ali Akbar Hashemi-Rafsanjani balked, unsure how to judge the first Democratic president since Jimmy Carter, the Clinton administration decided to take out the whip.

In testimony before a Senate appropriations subcommittee on March 30, 1993, Secretary of State Warren Christopher called Iran the “principal” supporter of international terrorism, and unveiled an administration effort to block new loans to Iran from international institutions.

“Iran does not deserve support of the World Bank, and we’re making that view known to our allies and friends,” Christopher said. He called Iran an “international outlaw.”

In a move widely seen as a slap in the face to the new administration, only hours after Christopher spoke, the World Bank approved a $160 million loan to Iran — the third such loan to Iran that month. These were the first World Bank monies Iran had received since the 1979 revolution. To most international observers, the World Bank was signaling its intent to rehabilitate the Islamic regime from its previous role as an outlaw state.

Round 2After this first attempt to whipsaw Iran into playing ball Arkansas-style, the White House left Iran policy to the State Department and the Pentagon, which viewed with mounting alarm Tehran’s success at acquiring dual-use technologies for its chemical, biological and nuclear weapons programs and the ballistic missiles needed to deliver them. For the most part, from 1993 through 1995, the Iranians turned to America’s Western European allies for these technologies.

Clinton administration efforts to win European cooperation in scaling back these sales were
plagued with incoherence. All the while the administration complained to the Europeans about their sales to Iran, the Commerce Department under Secretary Ron Brown was allowing U.S. firms to do virtually the same thing.

While the administration claimed it was carefully controlling U.S. sales for Iran to prevent the leakage of dangerous technology, it allowed U.S. firms to sell dual-use goods to Iran, including advanced computers, scientific instruments used in ballistics and missile design, toxins and micro-organisms, turbojet engines, vacuum pumps, centrifuges, machine-tools, gas separation equipment, and lots more.

Before Clinton took office in January 1993, sales of these types of goods required a special license from the Commerce Department. But export records kept by the U.S. Census Bureau, obtained by Congress in September 1993, showed that the Clinton administration was allowing these goods to be shipped license-free.

Some exports went directly to the
Atomic Energy Organization of
Iran and to two suspected chemical weapons plants. Toxins, which can be used in medical research or for biological weapons, were shipped without explanation to a Tehran bank.

The nuclear cloudOn Jan. 8, 1995, events took a serious turn for the worse, when Russia and Iran signed a
sweeping protocol on nuclear cooperation. Under the agreement, which was obtained and published by the Natural Resources Defense Council that May, Russia agreed to complete a nuclear power plant at Busheir along the Persian Gulf that had been abandoned 15 years earlier in the heat of Iran’s revolution.

Initially built by the German firm Siemens, the Busheir nuclear power plant was 80 percent complete by the time Khomeini seized power in 1979 and canceled the contract. Despite the fact that it never went operational, Iraq bombed the plant repeatedly during the 1980-1988 Iran-Iraq war. By the time the Russians came along, it needed to be almost completely rebuilt.

Russia agreed not only to rebuild the plant, for the rock-bottom cost of $800 million, but to train thousands of Iranian nuclear technicians and engineers to boot. Russia also pledged to deliver 2,000 tons of natural uranium to Iran and to build a centrifuge enrichment plant, uranium processing plants, and a “uranium vault,” which U.S. officials feared was a code-word for a nuclear weapons test shaft.

The U.S. objected to the Busheir contract, not because the light water reactors can contribute directly to a nuclear weapons program, which few experts believe possible, but because Iran is acquiring invaluable know-how by sending its people to Russia for training.

At a summit meeting in Moscow with Clinton on May 10, 1995, Russian President Boris Yeltsin made an extraordinary admission that confirmed all of Washington’s worst fears.

“It is true that the contract does contain components of civilian and military nuclear energy,” he said. “Now we have agreed to separate those two.”

Behind the scenes, U.S. Deputy Secretary of State Strobe Talbott, National Security Adviser Tony Lake and Ambassador Richard Schifter, a former assistant secretary of State for human rights and humanitarian affairs during the Reagan and Bush administrations, got to work. Talbott sought assistance from the Russians, Lake backstopped within the administration, while Schifter was asked to use his contacts with U.S.-based intermediaries, including a Maryland businessman, Paul H. Geffert, and several Iranian-Americans with close ties to Tehran.

The initiative also had the “active backing of Vice President Al Gore,” several sources involved in the negotiations said.

“The problem was how to hold a dialogue and reach an agreement, all without appearing to talk,” said one intermediary who carried messages back and forth from Washington to Tehran. “Neither side wanted to be seen publicly as taking the first step toward the other.” Both Washington and Tehran had staked out public positions of such mutual hostility it was difficult to back down.

For several months at the beginning of 1995, the intermediary served as a courier between Washington and Tehran, carrying messages and position papers between the two governments. This account is derived from more than 50 interviews with this reporter over the past five years, and has been crosschecked in most details with other persons involved in the talks.

“We got to the point that the lawyers on both sides were involved,” the intermediary said. The job of the lawyers was to determine the extent of Iranian assets in the United States and to resolve court cases pending at the Iran-U.S. Claims Tribunal in The Hague, Netherlands, since 1981. (The Hague Tribunal was established by the Algiers Accords of Jan. 19, 1981 that codified U.S.-Iranian financial disputes resulting from the revolution and allowed for the release of the U.S. hostages in Tehran).

The U.S. was trying to convince Iran to replace the nuclear power reactor at Busheir with natural gas power generators, and at one point even offered to help finance the project, which was to be completed by Russian firms.

“The final U.S. proposal was on Rafsanjani’s desk in early May 1995, just before Clinton’s Moscow summit with Yeltsin,” the intermediary recalls. Iran rejected it when Clinton issued Executive Order 12959 on May 6, banning all trade with Iran. Once again, the intermediary said, the Iranian government felt it had been tricked by the Clinton administration.

According to Washington Post columnist Jim Hoagland, Clinton’s hand was forced by alarming reports from the intelligence community claiming that Iran had begun a “crash program” to obtain nuclear weapons.

Writing one week after the May 10, 1995 summit in Moscow, Hoagland said Clinton handed Yeltsin “a five-page single-spaced U.S. intelligence report summarizing Iran’s nuclear weapons program” that drew on “sensitive HUMINT and SIGINT” reporting. The report alleged that Pakistan and China were aiding Iran’s nuclear weapons program, and listed a series of items Iran had acquired on the black market in Europe and Asia over the past eight years that were needed for nuclear weapons development.

Israeli officials who provided some of the sensitive information to the U.S. complained that turning over raw intelligence reports to the Russians had caused them to lose sources on the ground.

“We see that some of our sources are much less effective than before, now that the U.S. has provided information to the Russians,” Gen. David Ivry said in Tel Aviv in a September 1997 interview. Ivry, then serving as undersecretary of Defense, is now Israel’s ambassador to Washington.

While Yeltsin agreed at the summit to suspend the “military” aspects of the Iran-Russia Nuclear Protocol, neither he nor his successor, Vladimir Putin, have reined in Russia’s Atomic Energy Ministry, Minatom.

Since 1995, Minatom has expanded nuclear cooperation with Iran, not reduced it. In January 1998, newly appointed Minister of Atomic Energy Yevgeny Adamov traveled to Iran — his first foreign trip as minister — to discuss new nuclear contracts with Iran.

In April 1998, Adamov announced that Russia would build a 40 MW nuclear research reactor in Iran. This type of reactor is ideal for producing fissile material for nuclear weapons, and was used by Iraq in its clandestine nuclear weapons program.

“I am sure that Iran is trying to create a nuclear arsenal. It would be foolish to suppose that they do not want to create one.” Despite this, under Adamov’s guidance, Russia continued to supply Iran with nuclear technology.

In the latest wrinkle of this cooperation, reported by the New York Times on Sept. 20, D. V. Efremov Institute in St. Petersburg, a Russian government research institute, was identified for selling laser equipment to Iran for enriching uranium.

Round 3A third round of negotiations took place in mid-1996, when the administration was desperately seeking a way to oust Iraqi dictator Saddam Hussein and sought Iran’s help in orchestrating a coup prior to the 1996 presidential elections.

In August 1996, Saddam Hussein invaded northern Iraq, which was ostensibly under United Nations protection. The military upset was all the more damaging to the credibility of the Clinton administration because the Central Intelligence Agency had operatives on the ground that were managing some 6,000 Iraqis involved in the opposition Iraqi National Congress (INC).

Saddam’s invasion was devastating to the INC. Hundreds of INC members were arrested and tortured. Many were executed. Some 6,000 Iraqis fled across the border to Turkey and demanded political asylum from the United States.

The response of the Clinton administration to Saddam’s attack was to lob a few Tomahawk cruise missiles against radar sites to the south of Baghdad, hundreds of miles from the fighting. The administration’s weak response was widely criticized in the U.S. press, and encouraged Saddam to challenge the U.S. repeatedly, leading to the withdrawal of United Nations arms inspectors in 1998.

But in the late summer of 1996, a different politics prevailed: electoral politics. Bill Clinton and Al Gore were desperate for a quick hit on Iraq. They turned to CIA Director John Deutch to see what kind of rabbit he could pull out of the intelligence hat.

“Deutch changed the policy on Iraq,” says a former senior Clinton administration official. “After a meeting at the White House, he went back to the CIA and told them to bring him the head of Saddam.”

Deutch shifted from supporting CIA covert action, which was aimed at promoting a democratic alternative to Saddam’s rule, to finding Iraqi officers willing to carry out a coup. The only problem was, Saddam snuffed them out, unmasking a coup plot by officers in his Special Security Organization in the summer of 1996.

The failed coup, and Saddam’s move into the Kurdish enclave in northern Iraq, set the stage for the next round of the Iran negotiations: sending intermediaries to Tehran seeking Iran’s help in overthrowing Saddam.

In early September 1996, an emissary from the National Security Council contacted an Iranian intermediary then in Washington, D.C., and sent a top secret message to Tehran.

“The White House wanted to send an 8-person CIA team to Iran, to work with Iraqi opposition groups and Iranian intelligence on a coup plot to overthrow Saddam,” said one source who took part in these meetings in Washington.

The message was dispatched to Tehran later that month, and President Rafsanjani and Iran’s Intelligence Ministry agreed — at least in principle. But concern that the plan would come to the attention of rivals in the foreign ministry caused them to request that the CIA team enter Iran on third country passports.

By the time the passport and visa arrangements had been made, the 1996 presidential elections had come and gone, and the Clinton administration lost interest in pursuing the initiative.

The Iranian intermediary came back to Washington in December 1996, bringing Rafsanjani’s approval and his offer to cooperate against Saddam. Although the intermediary met with a senior officer from the CIA’s Clandestine Service, he was warned by the White House not to pursue the contacts further. The administration’s biggest fear was that news of their contacts with Iran would leak to the American media.

By the time the next round of secret talks started, involving former Clinton administration officials and Maryland businessman Paul H. Geffert, the Iranians would be far more amenable to talk.

For the first time in the history of modern terrorism, the victims had started to fight back. And in Tehran, the government was taking notice.

Next: ‘Crime and punishment’: In an ironic twist, President Bill Clinton has become Iran’s best advocate in the United States, protecting Iran’s assets and shielding Iran’s leaders from prosecution, even as new anti-terrorism laws allow the families of victims to sue in U.S. courts.

Editor’s note:
The Western Journalism Center is a non-profit, tax-exempt organization that sponsors independent investigative reporting projects into government fraud, waste, corruption and abuse. The charity was founded by Joseph Farah, now editor and chief executive officer of WorldNetDaily.com, but is an entirely autonomous company.

If you would like to support more journalism like Kenneth Timmerman’s “October Surprise” series with tax-deductible contributions, you can do so by calling 1-800-952-5595, by writing to the center at P.O. Box 2450, Fair Oaks, CA 95628, or by making your donation
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Kenneth R. Timmerman is a veteran investigative reporter who has published three books on the arms trade and intelligence issues.